Neurons contact each other mostly by synaptic transmission at synapses. Synaptic transmission is mediated by calcium-triggered vesicle fusion with the plasma membrane, which releases transmitter molecules that act on postsynaptic transmitter receptors. My goal is to improve our understanding on the cellular and molecular mechanisms underlying synaptic vesicle exocytosis, which are the building block for synaptic transmission and thus the signaling process in the neuronal network. My progress last year is listed in the following. First, vesicle fusion is generally referred to as vesicle fusion with the plasma membrane. We discovered a novel form of exocytosis and endocytosis at synapses, the compound fusion between vesicles which forms large compound vesicles, followed by fusion of these compound vesicles with the plasma membrane and subsequent bulk endocytosis (He et al.,Nature, 2009). Like regular vesicle fusion, compound fusion is mediated by the calcium binding with its calcium sensor, synaptotagmin. Compound fusion increases quantal size and mediates a widely observed form of synaptic plasticity, the post-tetanic potentiation. These findings call for a modification of the current model on synaptic vesicle fusion. Second, nerve terminals are generally considered the destination points for electrical signals, which propagate unidirectionally from the soma to nerve terminals. Here, we demonstrate that small hyperpolarizations or depolarizations, generated under various physiological conditions in nerve terminals, travel back up the axon, and change the threshold for initiating action potentials and thus firing patterns (Paradiso &Wu, Nature Neurosci, 2009). These results suggest a novel mechanism for information processing in neurons and neuronal circuits. They call for modification of the current view that the electrical signal can only propagate from soma to the nerve terminal. Third, we reviewed how vesicles are associated with voltage-gated calcium channels at nerve terminal, which determines the strength of the synapse (McNeil &Wu, Neuron, 2009).